Press Release|Public Finance

KBRA Affirms AA Rating for Chicago Transit Authority Sales Tax Receipts Revenue Bonds, and Affirms AA- Rating on Second Lien Sales Tax Receipts Revenue Bonds; Outlook on Both Liens is Stable

7 Mar 2024   |   New York


KBRA affirms the long-term rating of AA for the Chicago Transit Authority (CTA) Sales Tax Receipt Revenue Bonds (First Lien). The long-term rating of AA- for CTA's Second Lien Sales Tax Receipts Revenue Bonds is also affirmed. The Outlook for both liens is Stable.

Key Credit Considerations

The ratings were affirmed because of the following key credit considerations:

Credit Positives

  • Pledged revenues derive from a broad-based sales and use tax levied in the regional transportation district and have historically provided strong debt service coverage.
  • The 2.0x First Lien and 1.50x Second Lien additional bond provisions provide sound protection against over-leveraging.
  • Historically consistent levels of funding reflect the essentiality of CTA mass transit services to the economic underpinnings of the Chicago metro area.

Credit Challenges

  • Pledged revenues (Sales Tax Receipts) are economically sensitive. The level of the combined state, county, city and RTA sales tax is already exceedingly high at 10.25%, leaving little flexibility for an increase.
  • Sales Tax Receipts Revenue Bonds are not secured by a debt service reserve fund.
  • Sales Tax Receipts can be intercepted for pension contributions or to satisfy the farebox revenue recovery ratio. Continued waivers of this ratio beyond 2025 are dependent upon actions of the State legislature.
  • Operating liquidity, based on unrestricted cash and cash equivalents, is thin.
  • CTA is projecting an operating shortfall of $576.9 million in FY 2026. There is currently no definitive plan in place to address this shortfall.

Rating Sensitivities

For Upgrade

  • Increased statutory allocation of pledged revenues, including a pledge of additional revenue sources, and increased RTA discretionary funds to CTA.
  • Significant and sustained improvement in debt service coverage.

For Downgrade

  • Significant decline in pledged revenues.
  • Significant decline in debt service coverage.

To access rating and relevant documents, click here.



A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Only those ratings on securities issued by this Issuer that also are denoted on the Security Ratings tab for this Issuer on as “endorsed” by Kroll Bond Rating Agency Europe Limited into the European Union and/or by Kroll Bond Rating Agency UK Limited into the UK are covered by the disclosures set forth in this press release and the corresponding Information Disclosure Form. No other ratings on issuances by this Issuer have been endorsed into the European Union or the UK, and the disclosures set forth herein and in the corresponding Information Disclosure Form are inapplicable to those ratings and may not be used for regulatory purposes by European Union or UK investors in these securities.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003438

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